Navigant Research Blog

Advanced Energy Drives Economic Growth

Dexter Gauntlett — February 24, 2013

President Obama’s shout-outs to climate change and clean energy policy in both his inauguration and State of the Union speeches have generated a lot of buzz in climate and clean energy. A new Pike Research report, commissioned by the Advanced Energy Economy Institute (AAEI), was published the week before the inauguration to quantify the “advanced energy” market, which is significantly broader than the usual definitions of “clean energy.” The advanced energy concept could be the most realistic way of capturing the Obama Administration’s (as yet undefined) energy policy.

AEEI is a nonprofit educational and charitable organization affiliated with Advanced Energy Economy (AEE), a national association of business leaders with the stated goal of making the global energy system more secure, clean, and affordable. The organizations define advanced energy as a broad range of products and services that constitute the best available commercial technologies for meeting energy needs today and tomorrow. The report, “Economic Impacts of Advanced Energy” draws upon more than 60 previously published Pike Research studies, as well as information gathered by Navigant’s Energy Practice, to provide an assessment of advanced energy markets measured by revenue generated by the individual product categories, globally and within the United States. The following excerpt spells it out:

“Advanced energy is not static but dynamic, as innovation and competition produce better energy technologies, products and services over time. Today, electric and plug-in hybrid cars, natural gas-fueled trucks, high-performance buildings, energy-saving industrial processes, high-capacity wind turbines, on-site solar power, and advanced nuclear power plants are all examples of advanced energy, as they diversify energy sources, reduce health and environmental costs to communities, and use energy resources more productively. While advanced energy represents an opportunity for U.S. companies and workers, not only to serve the domestic market but to export goods and services into the global energy market, this opportunity has never been quantified in one place.”

The U.S. advanced energy market reached $132.0 billion in 2011, representing nearly 12% of the global market. The domestic advanced energy market is expected to grow to an estimated $157.0 billion in 2012, with the U.S. share of the global market expected to rise to 15%.

The U.S. advanced energy industry contributed $13.9 billion in federal tax revenue in 2011, plus another $6.7 billion in state and local tax revenue, for a total tax contribution of $20.6 billion.

Globally, advanced energy is larger, by revenue, than pharmaceutical manufacturing, and roughly 2/3 the size of telecommunications.

In the U.S., advanced energy is larger than the trucking industry that distributes goods throughout the country and more than twice the size of the commercial casino industry.

The benefit of AEEI’s big-tent approach to advanced energy is that it brings together a critical mass of interests that should be able to generate momentum that will translate into policies that could reduce carbon emissions while expanding the economy. By the same token, however, the centrist approach, because of its inclusion of nuclear and natural gas in particular, will ruffle some feathers along the way. These are not easy decisions for utilities, grid operators, and ratepayers – let alone policymakers – but the new report at least provides some real-world baselines and defines one possible path forward.